Adobe on Monday shelved its US$20-billion cash-and-stock deal for cloud-based designer platform Figma, pointing to “no clear path” for approvals from antitrust regulators in the EU and the UK.
The deal, which was announced in September last year, was the latest to draw tough scrutiny from regulators worried over Big Tech acquisitions that boost dominant companies’ market power or involve start-ups seen as nascent rivals.
Shares of the Photoshop and Illustrator maker, which will pay a termination fee of $1-billion to Figma, rose about 1.7% in pre-market trading on Monday.
Britain’s competition watchdog said earlier on Monday that Adobe would not propose remedies to resolve regulatory concerns regarding the buyout.
The European Commission and UK’s Competition and Markets Authority did not immediately respond to requests for comment.
Adobe had argued it does not compete with Figma in any meaningful way.
It had said in November its only product relevant to the antitrust question was the Adobe XD design tool, which lost $25-million as a standalone app over the last three years and has only five full-time employees.
‘Future of work’
“Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently,” Adobe CEO Shantanu Narayen said in a statement.
The deal was seen a bet on “the future of work” but sparked investor concerns over the rich price tag and wiped out more than $30-billion in Adobe’s market value when it was announced.
It was also a major win for Figma’s venture capital backers, including Index Ventures, Greylock Partners and Kleiner Perkins.
Earlier this month, Adobe forecast annual and quarterly revenue below Wall Street estimates as tightened client spending remains a drag. — Akash Sriram and Chavi Mehta, (c) 2023 Reuters